Plaintiffs-Appellees-
Cross-Appellants.
Appeal from the
Circuit Court of
Cook County.

Honorable
Jennifer Duncan-Brice,
Judge Presiding.

JUSTICE GORDON delivered the opinion of the Court:

BACKGROUND FACTS

This litigation is a consolidated action which arose out of
a transaction for the sale of a business which sold replacement
parts for printing presses. This action consists of two suits,
the first one brought in the chancery division by plaintiff
Robert Fleck against Quality Components, Wally Stoneham and
William Guckien for payment of money owed to him under a non-competition agreement between him and Quality and guaranteed by
Stoneham and Guckien, and by plaintiff Kel-Keef for payment on a
promissory note between it and Quality and guaranteed by Stoneham
and Guckien for the assets of the business which Kel-Keef sold to
Quality pursuant to a purchase agreement. The second lawsuit was
brought in the law division against Fleck and Kel-Keef by Quality
for breach of those same agreements.

At the trial William Stoneham testified for Quality
Components Corporation ("QCC II") that he began working for a
company known as DEV Industries ("DEV") in 1984 as a salesman.
DEV was in the business of selling replacement parts for printing
presses. DEV did not manufacture the parts, but kept blueprints
numbering in the hundreds or thousands for all of the parts which
it sold which it would then job out to machine shops to fabricate
the parts which its customers requested. While working at DEV
Stoneham became aware of a lawsuit (the "Rockwell I" litigation)
that was brought in federal court against DEV by Rockwell
Graphics ("Rockwell") which claimed the ownership to certain of
these blueprints. In 1988 defendant Robert Fleck ("Fleck")
purchased the replacement parts division of DEV (for which
Stoneham worked) and named the new company Quality Components
Corporation ("QCC I"). Fleck had previously been president of
DEV and was one of its four shareholders. Stoneham became an
employee of the new company (QCC I) and helped move the drawers
of blueprints from DEV to QCC I.

In 1989 Stoneham and William Guckien ("Guckien") began
negotiations with Fleck to purchase the assets of QCC I. During
the negotiations, Stoneham had several discussions with Fleck
regarding the Rockwell I litigation. Fleck told Stoneham that
none of the blueprints which QCC I possessed were involved in the
Rockwell lawsuit. Stoneham and Guckien set up a corporation
(later identified as Components Holdings Inc. ("CHI")) to
purchase the assets of QCC I. After it acquired the assets of
QCC I, CHI adopted the name of the vendor Quality Components
Corporation (QCC II). After the sale of its assets to QCC II,
QCC I changed its name to Kel-Keef Enterprises, Inc. ("Kel-Keef").

In 1991 QCC II was joined as a defendant in a lawsuit
brought in Cook County circuit court (No. 91 CH 01011) by
Rockwell (the "Rockwell II" litigation), which also named DEV and
Fleck. The lawsuit was related to the Rockwell I litigation
against DEV, alleging that QCC II had blueprints which belonged
to Rockwell. There was no list attached to Rockwell's suit
papers identifying the blueprints which the lawsuit related to,
but Fleck sent Stoneham a list of the blueprints which were at
issue in the first lawsuit against DEV from which Stoneham
determined that 53 of the blueprints which QCC II had acquired
from QCC I were in fact claimed by Rockwell in its lawsuit. QCC
II thereupon settled the Rockwell II litigation against it in
1993 pursuant to which QCC II gave up to Rockwell the 53
blueprints which Rockwell claimed from it in that lawsuit.
Stoneham further averred that on the advice of their attorney,
Stoneham and Guckien decided to stop making payments to Fleck
pursuant to the non-competition agreement and to Kel-Keef
pursuant to the purchase agreement.

Deborah Ruff testified in rebuttal for QCC II that she is an
attorney who represented Rockwell in several lawsuits against
Fleck, DEV, QCC II and other parties pursuant to Rockwell's
allegations that those parties possessed or misappropriated
Rockwell's blueprints. Ruff testified that the first case,
Rockwell I, was filed in federal court in 1984 against Fleck and
DEV. In 1991 Rockwell initiated the Rockwell II litigation in
state court against DEV, Fleck and QCC II. QCC and Rockwell
settled the Rockwell II case for $3,300.00. The third Rockwell
case (the "Rockwell III" litigation) was filed in federal court
in 1992 against Fleck.

It is not in dispute that in 1989 the federal magistrate in
the Rockwell I litigation found in favor of Fleck and that
decision was later overturned by the Seventh Circuit. The
Rockwell I litigation ultimately ended with an injunction being
entered against Fleck in 1993. The Rockwell III litigation also
ended against Fleck in 1993 when Fleck signed a consent decree to
settle the litigation in which he admitted misappropriating trade
secrets from Rockwell.

William Guckien testified for QCC II that he and Stoneham
purchased the assets of QCC I from Fleck. The purchase included
the blueprints for the replacement parts which QCC I sold, and
Guckien averred that those blueprints were of critical importance
to the business. After QCC II settled the Rockwell II
litigation, it was no longer able to use the 53 blueprints which
Rockwell had claimed. As a consequence, QCC II could no longer
obtain the parts described by those blueprints at competitive
prices. Thus, according to Guckien, QCC II was not able to
effectively compete with other companies in the replacement parts
business and it was resultantly forced to shut down. QCC II
ceased making payments owed to Fleck and Kel-Keef on the purchase
agreement and the non-competition agreement because Fleck had
admitted in a consent decree pursuant to the Rockwell III
litigation that he had obtained the blueprints illegally. Fleck
and Kel-Keef then sued QCC II in chancery demanding payment
pursuant to the purchase and non-competition agreements. QCC II
responded by suing Fleck and Kel-Keef at law for breach of
contract and fraud.

Mark Bischoff testified for Kel-Keef that he was the
attorney who represented Fleck and QCC I during the sale of QCC
I's assets to Stoneham and Guckien's company, CHI. Bischoff
testified that he told the buyers about the Rockwell I
litigation; that Fleck and QCC I did not want to make any
representations concerning it; and that they should look into
that litigation. Bischoff further stated that the buyers were
encouraged to contact the attorneys for Rockwell. At one point
in the negotiations, the attorney for the buyers asked for an
indemnification agreement which would hold Fleck and DEV
responsible for any damages sustained by QCC II as a result of
the Rockwell litigation; however, Fleck refused to consent to
such an indemnification agreement. Bischoff averred that an
attorney for the buyers (CHI) told him that they would "live with
the Rockwell situation."

Robert Fleck, the president of Kel-Keef, testified for Kel-Keef. Fleck averred that in 1989 he did not believe that he had
misappropriated trade secrets from Rockwell. He further stated
that in 1989, on the day of the closing, the magistrate judge in
the Rockwell I litigation found in his favor. That ruling was
later overturned on appeal, and Fleck identified an injunction
which was entered against him pursuant to the Rockwell I
litigation on July 26, 1993. Fleck also identified a consent
decree which he had signed on December 14, 1993, pursuant to the
Rockwell III litigation. In the consent decree Fleck admitted
that while he was employed by DEV he utilized misappropriated
blueprints and other Rockwell trade secrets for the benefit of
DEV.

The transaction for the sale of the assets of QCC I was
accomplished through eleven documents, which Stoneham identified.
The relevant documents are summarized below. CHI received a
purchase agreement, a non-competition agreement and a bill of
sale. The Asset Purchase Agreement ("purchase agreement")
between QCC I and CHI provides that the assets of QCC I will be
sold to CHI in exchange for a total of $160,000 to be paid over
five years. Article IV of the purchase agreement is entitled
"Representations and Warranties of Seller and of Fleck" and it
contains a warranty of title stating that the seller has good,
exclusive and marketable title to the sold assets, except as set
forth in schedule 4.6 which does not list anything relevant to
this appeal. Article IV also states that the seller and Fleck
have not knowingly made any statement which contains any untrue
statement of material fact or omits a material fact. Article VI
is entitled "Post-Closing Matters" and it contains a section
entitled "Survival of Representations and Warranties." This
section states that the representations and warranties set forth
in the agreement will remain in full force and effect and shall
survive the closing and the transfer of the assets for two years.

CHI also received a "Noncompetition Agreement" which was
signed contemporaneously with the purchase agreement and provided
that Fleck agreed not to compete with CHI for five years. In
consideration for this promise, the agreement provided that CHI
would pay $125,000 to Fleck in five annual installments of
$25,000 per year.

QCC I received several instruments, of which the relevant
documents are summarized below. The "Non Negotiable Promissory
Note" provided for CHI to make payments to QCC I totaling
$160,000 over five years pursuant to the sale effected by the
purchase agreement and the bill of sale. QCC I also received a
"Guaranty" which provides that Guckien and Stoneham personally
guaranty full and prompt payment of the promissory note and the
non-competition agreement by CHI.

QCC I and Fleck also received a letter ("the side letter")
from CHI and its president, Stoneham. The letter states that the
purchasers of the assets of QCC I have been fully informed about
the lawsuit between Rockwell and DEV, and that the purchaser
understands that QCC I is "making no representations or
warranties with regard to this lawsuit." The letter further
states that in the event of any potential claims with regard to
the lawsuit each party "shall be responsible for their respective
claim."

The initial action in this consolidated case was filed in
chancery by Kel-Keef and Fleck against QCC II, Guckien and
Stoneham (the "chancery action"). The suit contained six counts.
Two counts, III and VI, were dismissed without prejudice before
trial and are not relevant to this appeal. In count I Kel-Keef
sued QCC II for its alleged breach of the promissory note, and in
count II Kel-Keef asked for enforcement of the personal guarantee
of the promissory note against Guckien and Stoneham. In count IV
Fleck sued QCC II for breach of the non-competition agreement,
and in count V Fleck asked for enforcement of the personal
guarantee of the non-competition agreement. The suit alleged
breach by QCC II of the promissory note, breach of the non-competition agreement, and asked for enforcement of the guaranty
as against the individual sureties, and foreclosure on the
secured assets. QCC II later filed a separate suit at law (the
"suit at law") against Kel-Keef and Fleck arising from QCC II's
loss under the Rockwell II litigation. Stoneham and Guckien were
not parties to this suit. The suit sought recovery against Kel-Keef and Fleck on four counts. Count III alleged violations of
warranties pursuant to the uniform commercial code, and the court
granted a directed verdict for Fleck and Kel-Keef on this count
during trial. Count IV alleged deceptive business practices and
is not involved in this appeal. Count I alleged fraud and it was
ultimately submitted to the jury. Count II alleged breach of
contract. A directed verdict was granted in favor of Fleck on
count II, but count II was submitted to the jury as against Kel-Keef. The two cases were consolidated, and tried simultaneously.
The chancery action was tried to the court, and the action at law
was tried to the jury.

In the action at law the jury returned a verdict in favor of
QCC II and against Kel-Keef on the breach of contract count and a
verdict in favor of Kel-Keef and Fleck on the fraud count. The
jury awarded QCC II damages of $60,000. In the chancery action
the court initially found that Fleck (Kel-Keef)(1) had breached the
purchase agreement and that the breach was material. QCC II was
thus excused from making payments under the purchase agreement
and the promissory note. The court found that the non-competition agreement was a separate contract between QCC II and
Fleck individually which had not been breached by the promisor,
Fleck, and that QCC II was still obligated to make payments
pursuant to it. The court directed the parties to submit amended
petitions for attorney fees.

Both sides filed motions to reconsider. Kel-Keef argued
that QCC II could not receive damages for breach of the purchase
agreement and be excused from making further payments under the
purchase agreement as that constituted a double recovery for QCC
II. Kel-Keef further argued that QCC II had elected the remedy
of damages and therefore could not rescind the contract as
rescission disaffirms the contract and is thus inconsistent with
seeking a remedy of damages which affirms the contract. On
reconsideration the court agreed with Kel-Keef's position and
entered its final judgement in light of the reconsideration on
June 11, 1999. The court entered judgement in the suit at law
for QCC II and against Kel-Keef on count II (breach of contract)
for $60,000. The court entered judgement for Fleck on count II
and for Fleck and Kel-Keef on count I. In the chancery case the
court entered judgement on counts I and II in favor of Kel-Keef
and against QCC II, Stoneham and Guckien, jointly and severally.
The court therefore found that Kel-Keef was entitled to recover
for the purchase agreement in its chancery suit subject to a
setoff of the jury's award of $60,000 damages in the suit at law
and the award of $67,118.87 in attorney fees which the court
awarded pursuant to the suit at law. The court therefore found
that QCC II was required to pay the remaining balance under the
promissory note subject only to the two setoffs. On counts IV
and V the court entered judgement in favor of Fleck and against
QCC II, Guckien and Stoneham.

This appeal followed. QCC II, Guckien and Stoneham appeal
and Kel-Keef and Fleck cross-appeal from the court's entry of
final judgement. QCC II argues on appeal that the trial court
erred as a matter of law in concluding that QCC II had elected
the remedy of damages; that Kel-Keef's material breach of the
contract excused QCC II from any further obligation to pay; that
the non-competition agreement was part of a single contract for
the sale of a business and Kel-Keef's breach of the purchase
agreement thus also excuses QCC II from performing under the non-competition agreement; that the trial court abused its discretion
by excluding QCC II's proffered expert witness on damages; and
that the trial court erred by excluding evidence about a lawsuit
which existed at the time of the contract and was not disclosed
by Kel-Keef. On cross-appeal, Kel-Keef argues that the trial
court erred in not granting its motion for a directed verdict on
the breach of contract claim in the case at law; that there was
insufficient evidence as to damages; and that QCC II is not
entitled to attorney fees or costs.

ANALYSIS(2)

I. QCC II'S APPEAL

A. ELECTION OF REMEDIES

QCC II first argues that the trial court erred in holding
that QCC II elected the remedy of damages for Kel-Keef's breach
of the contract by suing for damages, even though final judgement
had not yet been entered on QCC II's suit at law for damages.
QCC II concedes that it cannot both be excused from performance
under the contract and receive damages as those remedies are
inconsistent. Damages affirm the contract, while the other
remedy repudiates it; however, QCC II argues that it expressly
elected to abandon its verdict for damages in the suit at law in
favor of being excused from performance of the contract in the
chancery suit. Kel-Keef argues that QCC II elected damages as
its remedy by filing the suit at law seeking damages, and that it
was not necessary for the suit at law to be prosecuted to
judgement for an election to occur.

The general rule regarding election of remedies is well
settled. The doctrine of election of remedies "should be
confined to cases where (1) double compensation of the plaintiff
is threatened or (2) the defendant has actually been misled by
the plaintiff's conduct or (3) res adjudicata can be applied."
Faber, Coe & Gregg, Inc., v. First National Bank of Chicago, 107
Ill. App. 2d 204, 211, 246 N.E.2d 96, 100 (1969). Accord,
International Association of Machinists & Aerospace Workers v.
Industrial Commission, 79 Ill. 2d 544, 550-51, 404 N.E.2d 787,
789 (1980). In this case the trial court was presented with a
situation where double compensation was threatened. QCC II was
initially both excused from performing under the purchase
agreement and awarded damages for Kel-Keef's breach of the
purchase agreement, and QCC II has conceded that these remedies
are inconsistent.

It is clear that the "prosecution of one remedial right to
judgement or decree constitutes an election barring subsequent
prosecution of inconsistent remedial rights." Majcher v. Laurel
Motors, Inc., 287 Ill. App. 3d 719, 726, 680 N.E.2d 416, 421
(1997). However, the question of whether a suit not prosecuted
to judgement constitutes an election barring the plaintiff from
an inconsistent remedy is less well settled. See E.H. Schopler,
Annotation, Conclusive Election of Remedies as Predicated on
Commencement of Action, or its Prosecution Short of Judgement on
the Merits, 6 A.L.R. 2d 10, 70 (1949) (in Illinois "no case
stating a general rule on [this] subject *** has been found; and
none can safely be deduced from the cases"). See also Faber, Coe
& Gregg, 107 Ill. App. 2d at 210, 246 N.E.2d at 99 (declining to
discuss, reconcile or distinguish the cases on this issue, rather
falling back on the general rule and refusing to apply the
doctrine of election of remedies). But see Crown Life Insurance
Company v. American National Bank and Trust Company of Chicago,
35 F.3d 296, 299 (7th Cir. 1994) (finding no election of remedy by
a party that expressed an intent to declare a forfeiture of a
contract because an "election of remedy only occurs when a party
accepts the benefit of pursuing the initial remedy" and no
forfeiture had actually been effected).

We find the rule stated in the Restatement (Second) of
Contracts to be persuasive.

"If a party has more than one remedy under the rules
stated in this Chapter, his manifestation of a choice
of one of them by bringing suit or otherwise is not a
bar to another remedy unless the remedies are
inconsistent and the other party materially changes his
position in reliance on the manifestation."
Restatement (Second) of Contracts § 378 (1981).

The reporter's note states that the rule "under which the mere
bringing of an action might amount to an election, is abandoned
as no longer the weight of the authority." Restatement (Second)
of Contracts § 378 reporter's note cmt. A. While there is old
authority in Illinois supporting the earlier rule (see generally,
Schopler, 6 A.L.R.2d at 72; see, e.g., Hanchett v. Riverdale
Distillery Co., 15 Ill. App. 57 (1884) ("a suit brought by the
vendor against the vendee for the price of the goods with
knowledge of the fraud by which the sale was effected, affirms
the sale, and he can not thereafter rescind the same")), there is
more recent authority indicating a shift towards the rule of the
Second Restatement (see, e.g., Gironda v. Paulson, 238 N.E.2d
1081, 1084, 605 N.E.2d 1089, 1091 (1992) ("The election of
remedies doctrine applies in cases of alternative pleading only
where the opposing party has substantially altered his position
in reliance on the plaintiff's choice"); Finke v. Woodard, 122
Ill. App. 3d 911, 919, 462 N.E.2d 13, 19 (where defendant did not
substantially change his position in reliance on plaintiff's
initial claim for damages, there was no election of remedies and
plaintiff was permitted to later add an equitable claim for
rescission and it was proper to submit both the legal and
equitable claims to the jury); Altom v. Hawes, 63 Ill. App. 3d
659, 662-63, 380 N.E.2d 7, 9 (1978) (citing the Restatement and
Corbin)).

The comment to the Restatement explains that a "change of
position is 'material' within the meaning of *** Section [378] if
it is such that in all the circumstances a shift in remedies
would be unjust." Restatement (Second) of Contracts § 378 cmt.
a. Corbin is in substantial agreement with the Restatement. 5A
Corbin on Contracts § 1220. Corbin states that a choice of
remedy will only be a bar to an alternative remedy if "the party
against whom the remedy is asked makes a substantial change of
position in reliance on the manifestation of intention before
notice of its retraction." 5A Corbin on Contracts § 1220. Corbin
further adds that the conclusiveness of an election is "dependent
on the existence of facts sufficient to create an 'estoppel.'"
Corbin § 1220. These positions have been adopted in Illinois.
See Altom, 63 Ill. App. 3d at 662, 380 N.E.2d at 9; accord
Monmount Public Schools, District 38 v. D. H. Rouse Co., 153 Ill.
App. 3d 901, 506 N.E.2d 315 (1987) (letter terminating contract
to repair a roof was not an election of remedies where the
contractor had not yet started work on the roof and took no
affirmative action in reliance on the letter).

Each of the cases which Kel-Keef has cited in support of its
contention that a suit not prosecuted to judgement constitutes an
election are distinguishable, in that in each case the plaintiff
had obtained satisfaction on one of the inconsistent remedies or
declared forfeiture of the contract at issue. For example, in
Lombard v. Elmore, 112 Ill. 2d 467, 493 N.E.2d 1063 (1986), one
of the plaintiff's inconsistent claims was prosecuted to
judgement. Lombard v. Elmore, 134 Ill. App. 3d 898, 902, 480
N.E.2d 1329, 1332 (1985). See also SJS Investments, Ltd. v. 450
East Partnership, 232 Ill. App. 3d 429, 433, 597 N.E.2d 1213,
1215 (1992)(plaintiff obtained one of his remedies-the return of
his earnest money); Cala v. Gerami, 137 Ill. App. 3d 936, 938-9,
484 N.E.2d 1199, 1202 (1995)(plaintiff declared forfeiture of the
contract at issue); Bruno Benedetti & Sons, Inc. v. O'Malley, 124
Ill. App. 3d 500, 508, 464 N.E.2d 292, 298 (1984)(plaintiff
declared forfeiture of the contract at issue).

"While a plaintiff may pursue a remedy at law for
damages and alternatively seek specific performance of
the contract, plaintiff cannot have it both ways.
Plaintiff cannot affirm the contract, obtain specific
performance and, in essence, erase the breach, yet also
seek damages at law for breach of contract."

We find nothing in the language of the Douglas Theater decision
to support either Kel-Keef's argument or the holding of the trial
court. In fact, Douglas Theater appears to support the opposite
proposition, as it states that a plaintiff "may pursue a remedy
at law for damages and alternatively seek specific performance."
Douglas Theater only prevents a plaintiff from seeking a remedy
once a remedy inconsistent with the remedy sought is obtained.

In this case, following the rule of the Restatement, QCC
II's suit at law for damages did not constitute an election of
remedies under the rule of the Restatement. Nothing in the
record indicates that Kel-Keef materially changed its position in
reliance on QCC II's bringing the suit at law. Also, there is
no argument that at the time QCC II attempted to elect not to
pursue its remedy of damages that the verdict for breach of
contract in the suit at law had not been entered as a final
judgement. Since bringing the suit at law did not constitute an
election, and QCC II initially prevailed in both suits, QCC II
was required to elect which remedy it wished to pursue before
final judgement was entered in either case. Majcher v. Laurel
Motors, Inc., 287 Ill. App. 3d 719, 726, 680 N.E.2d 416, 421
(1997). QCC II expressly elected that it wished to abandon its
remedy of damages in favor of being excused from the contract.
Furthermore, once QCC II's election was made it became final and
irrevocable. See generally, 16A I.L.P. Election of Remedies §5;
Moran v. Union Bank of Chicago, 352 Ill. 503, 508, 186 N.E. 182,
184 (1933)(an election "once manifested by appropriate words or
acts, is irrevocable"); Sluka v. Bielicki, 335 Ill. 202, 210, 167
N.E. 90, 93 (1929)("where the doctrine of election of remedies
applies, the bar arises as soon as the choice is made, and
becomes full and absolute against the other remedy at the time of
the filing of the petition, declaration or claim."

B. DID KEL-KEEF MATERIALLY BREACH THE CONTRACT?

QCC II next argues that it is entitled to be discharged from
its obligations under the purchase agreement based on the court's
initial finding in the chancery case that Kel-Keef materially
breached the purchase agreement. Kel-Keef argues that it is
unclear that the court's finding of a material breach survived
the judge's reconsideration; that it did not breach the contract;
that even if it did breach the contract the breach was not
material; and that it is thus entitled to receive payment under
the contract.

As a preliminary matter, the trial court's holding that QCC
II elected a remedy of damages was erroneous for the reasons
previously discussed and this erroneous holding was the basis of
the trial court's judgement in the chancery case requiring QCC II
to perform under the purchase agreement. Although this basis for
the trial court's holding must therefore be rejected, we must
nevertheless determine whether there is any other support in the
record for a judgement in favor of Kel-Keef in the chancery
action. Massie v. Minor 307 Ill. App. 3d 115, 121, 716 N.E.2d
857, 862 (1999)(appellate court may affirm the judgement of the
trial court on any basis in the record). Hence we must consider
the issues raised regarding the materiality of the breach.

The trial court's pre-reconsideration factual finding that
Kel-Keef materially breached the contract would, if accepted on
appeal, eliminate any such alternative support for the judgement
in favor of Kel-Keef in the chancery action. Israel v. National
Canada Corp., 276 Ill. App. 3d 454, 461, 658 N.E.2d 1184, 1191
(1995) (plaintiff must show it substantially performed in order
to recover on a contract). Thus, whether Kel-Keef can still
prevail in this appeal depends on our evaluation as to whether
Kel-Keef materially breached the contract. Meade v. Kubinski,
177 Ill. App. 3d 1014, 1024, 661 N.E.2d 1178, 1185 (1996)
(holding that whether a party has breached a contract is a
question of fact).

Kel-Keef argues that the status of the trial court's
initial, pre-reconsideration findings of fact is unclear in light
of the court's reconsideration and subsequent judgement in favor
of Kel-Keef in the chancery suit. We disagree. After
reconsideration the court found for Kel-Keef in the chancery suit
after holding that QCC II was not excused from paying under
either the purchase agreement or the non-competition agreement
because QCC II had elected to pursue the remedy of damages which
was inconsistent with a discharge of QCC II's obligations under
the purchase agreement. The court did not base its
reconsideration on a re-evaluation of its earlier factual
findings, but on the doctrine of election of remedies. Thus, the
court's earlier factual findings stand and are not affected by
the court's subsequent reconsideration.

The factual findings in this case present a somewhat unique
situation. Normally a court's findings of fact are reviewed
under the manifest weight of the evidence standard. Meade v.
Kubinski, 177 Ill. App. 3d 1014, 1024, 661 N.E.2d 1178, 1185
(1996) ("Whether a party has breached a contract is a question of
fact, and a finding of a breach or lack of a breach will not be
disturbed unless it is contrary to the manifest weight of the
evidence"). Furthermore the "trial court's finding must be given
great deference because the trial court has the opportunity to
view and evaluate witnesses' testimony and is, therefore, in the
best position to evaluate their credibility." Raclaw v. Fay,
Conmy and Co., 282 Ill. App. 3d 764, 767, 668 N.E.2d 114, 117
(1996). In this case, we are presented with a rather novel
situation where giving deference to the trial judge's findings of
fact with regard to the materiality of the breach would result in
a reversal of the chancery court's judgement, since that
judgement was based on an erroneous election of remedies ruling.
Nevertheless, the rationale for deferring to a trial court's
finding under the manifest weight of the evidence standard must
still prevail. Underlying that standard "is the recognition
that, especially where the testimony is contradictory, the trial
judge as the trier of fact is in a position superior to a court
of review to observe the conduct of the witnesses while
testifying, to determine their credibility, and to weigh the
evidence and determine the preponderance thereof." Greene v.
City of Chicago, 73 Ill. 2d 100, 110, 382 N.E.2d 1205, 1210
(1978). This rationale must be adhered to even though it leads
to the ultimate reversal of the trial court's judgement. The
alternative, that this court re-evaluate the evidence without
having seen or heard the witnesses simply to preserve the trial
court's judgement, makes little or no sense. Nor would a remand
to the trial court have any efficacy since the trial court's
finding is already known.

1. DID KEL-KEEF BREACH THE PURCHASE AGREEMENT?

QCC II apparently first argues that Kel-Keef breached the
purchase agreement because it breached the express warranty of
title contained in the purchase agreement with respect to the
sold assets in that it did not have good title to 53 of the
blueprints included in the assets sale. Kel-Keef argues that it
did not breach the purchase agreement because there was no
warranty that it transferred good title in the sold assets
(including the 53 blueprints) to QCC II. In support, Kel-Keef
contends that the express warranty of title in the purchase
agreement had lapsed due to its express two year limitation; that
the side letter was in any event effective to disclaim the
express warranty; and for that matter that the side letter was
also effective to exclude any implied warranty of title under the
UCC.

We agree with Kel-Keef's argument that the express warranty
in the purchase agreement is subject to a two year limitation and
is thus unavailable to QCC II. The purchase agreement contains a
clause stating that the "representations and warranties set forth
in this Agreement, or made pursuant to this Agreement, shall
remain in full force and effect *** and shall survive the Closing
and the transfer of the Sold Assets for a period of two (2)
years."(3) QCC II's action at law was filed in 1995, more than two
years after the purchase agreement was executed in 1989. There
was thus no express warranty of title beyond two years and a
claim that Kel-Keef breached the contract may not be predicated
on a breach of that express warranty. Because we conclude that
the express warranty fails due to its two-year limitation, we
need not address how the side letter affects it.

QCC II next argues that even if the express warranty was not
effective, Kel-Keef breached the implied warranty of title under
section 2-312 of the UCC. 810 ILCS 5/2-312. Kel-Keef argues
that the side letter was sufficient to exclude the implied
warranty of title. We agree with QCC II.

A warranty of title may be excluded or modified by specific
language giving the purchaser reasons to know that the vendor is
only selling what title he possesses. 810 ILCS 5/2-312;
Rockdale Cable T.V. Co. v. Spadora, 97 Ill. App. 3d 754, 757, 423
N.E.2d 555, 558 (1981). Very "precise and unambiguous language
must be used to exclude a warranty so basic to the sale of goods
as is title." Jones v. Linebaugh, 191 N.W.2d 142, 144-45 (Mich.
App. 1971). Furthermore, where the language in a purported
disclaimer expresses how the seller's liability will be limited
rather than what title (or lack thereof) the seller purports to
transfer, the purported disclaimer is ineffective. In Sunseri
v. RKO-Stanley Warner Theaters, Inc., 374 A.2d 1342, 1344 (Pa.
Super. 1977), a case cited with approval by the Rockdale court
(Rockdale, 97 Ill. App. 3d at 757, 423 N.E.2d at 558), the court
found language stating that the seller "shall in nowise be ***
liable *** upon or under guaranties [sic] or warranties ***
including, but not limited to, the implied warrant[y] of title"
insufficiently specific to disclaim the warranty of title. The
court reasoned that the language used was ineffective because it
was "couched in negative terminology, expressing what the seller
will not be liable for rather than what the buyer is or is not
receiving." Sunseri, 374 A.2d at 1345. The court suggested that
the 2-312 warranty of title could effectively be disclaimed by
language stating that "the seller does not warrant that he has
any right to convey the title to the goods." Sunseri, 374 A.2d
at 1345. See also Rockdale, 97 Ill. App. 3d at 757, 423 N.E.2d
at 558 (finding language stating that the seller purports to
transfer only such "right, title and interest" as he may possess
insufficient to disclaim the implied warranty of title).

The language in the side letter in the case at bar is
insufficiently specific to disclaim the implied warranty of
title. The letter does not mention the warranty of title, but
merely references a lawsuit (Rockwell Graphics Systems, Inc. v.
DEV Industries, Inc. (Rockwell I)) and states that the vendor is
"making no representations or warranties with regard to" that
lawsuit. Like the language rejected by the court in Sunseri, the
letter is too vague and general; it does not focus on the title
to any of the assets which the purchaser may or may not be
receiving in the transaction, but rather focuses on the liability
of the seller.

We also disagree with Kel-Keef's apparent argument that
there were circumstances sufficient to put QCC II on notice and
sufficient to exclude the 2-312 warranty of title. A warranty of
title may be excluded by circumstances which give the buyer
reason to know that the seller does not claim title in himself or
that the seller is purporting to sell only the title which he
has. 810 ILCS 5/2-312(2). Circumstances may be sufficient to
exclude the 2-312 warranty of title even if it has not been
excluded by sufficiently specific language. See, e.g., Rockdale,
97 Ill. App. 3d at 757, 423 N.E.2d at 558 (where language in the
bill of sale was insufficient to disclaim the implied warranty of
title, evidence of a conversation between the parties which put
the buyer on notice that the seller was selling only what right
he possessed in the subject matter constituted sufficient
circumstances to exclude the warranty of title). In this case
there are no such circumstances. The side letter states that QCC
II is on notice about the lawsuit it references, and that no
representations or warranties are made with regard to the
lawsuit. It does not say, however, that the lawsuit may affect
QCC II's title to some of the sold assets. Furthermore, Stoneham
testified that Fleck had told him that everything in the
blueprint files was "clean." In light of the above, we can not
say that the court's finding in the chancery case that Kel-Keef
breached the contract was against the manifest weight of the
evidence.

Moreover, we disagree with Kel-Keef's implied but
unarticulated argument that the implied warranty of title will
not operate in this case because it is displaced by the express
warranty of title in the purchase agreement. Warranties are to
be construed as cumulative and consistent when possible. See 810
ILCS 5/2-317. See also Heat Enchanters Inc. v. Aaron Friedman,
Inc., 96 Ill. App. 3d 376, 386, 421 N.E.2d 336, 343 (1981)
("whenever reasonable, warranties should be construed as
consistent and cumulative"). Furthermore, as we have noted
above, language must be specific to disclaim the implied warranty
of title. 810 ILCS 5/2-312(2). We are mindful of the rule of 2-317(c) (which we note the parties did not bother to raise) which
states that express warranties displace implied warranties. 810
ILCS 5/2-317(c). However, although the 2-312 warranty of title
does function like an implied warranty, it is technically not
considered an "implied" warranty under the UCC. 810 ILCS 5/2-312(1) cmt. 6. It appears from committee comment six that the 2-312 warranty of title was not designated as an implied warranty
to prevent the 2-316 disclaimer provisions from applying to it in
place of the internal disclaimer provisions provided by 2-312(2).
810 ILCS 5/2-312 cmt. 6 ("The warranty of subsection (1) is not
designated as an 'implied' warranty, and hence is not subject to
Section 2-316(3). Disclaimer of the warranty of title is
governed instead by subsection (2) which requires either specific
language or the described circumstances"). The same analysis
which the committee comment makes with respect to 2-316 applies
also with respect to 2-317(c). If the warranty of title is not
designated as an implied warranty with respect to 2-316 it
likewise does not come within the purview of 2-317(c) as both
purport to apply only to "implied" warranties. Furthermore, the
express warranty of title does not contain language which is
specifically inconsistent with the implied warranty of title.
See Sutter v. St. Clair Motors, Inc., 44 Ill. App. 2d 318, 323 194 N.E.2d 674, 677 (1963) (express warranty not inconsistent
with implied warranty where nothing in the express warranty
specifically negatived the implied warranty or brought such an
attempt to negative the implied warranty to the buyer's
attention).

2. WAS THE BREACH MATERIAL?

QCC II next contends that Kel-Keef's breach of the purchase
agreement was material. Kel-Keef argues that even assuming that
it did breach the purchase agreement, the trial court's finding
that the breach was material was against the manifest weight of
the evidence. Here too we agree with QCC II.

A material breach by one party to a contract discharges the
other party from performing its obligations. Dragon
Construction, Inc. v. Parkway Bank & Trust, 287 Ill. App. 3d 29,
33, 678 N.E.2d 55, 58 (1997). "The issue of whether or not a
breach of contract is 'material,' thereby discharging the other's
duty to perform, is a question to be decided on the inherent
justice of the matter." Susman v. Cypress Venture, 187 Ill. App.
3d 312, 316, 543 N.E.2d 184, 187 (1989). The "determination of
'materiality' is a complicated question of fact, involving an
inquiry into such matters as whether the breach worked to defeat
the bargained-for objective of the parties or caused
disproportionate prejudice to the non-breaching party, whether
custom and usage considers such a breach to be material, and
whether the allowance of reciprocal non-performance by the non-breaching party will result in his accrual of an unreasonable or
unfair advantage." Sahadi v. Continental Illinois National Bank
& Trust Co., 706 F.2d 193, 196 (7th Cir. 1983).

Based on our review of the record, we cannot say that the
trial court's finding that Kel-Keef's breach was material was
against the manifest weight of the evidence. William Guckien
testified that the blueprints were "critical" to the company
because the parts which QCC II sold were made from the blueprints.
After QCC II was forced to turn over the 53 blueprints to
Rockwell, the cost of acquiring the parts described by those 53
blueprints increased. To obtain the parts without the blueprints,
QCC II had to either pay someone to reverse engineer the parts or
purchase the parts from someone who had the blueprints. Because
both of these options were more expensive than having the parts
manufactured from blueprints, QCC II became less competitive.
While there was evidence that the 53 blueprints returned to
Rockwell were only a small fraction of the entire assets
purchased, it is not the place of this court to re-evaluate the
evidence weighed by the trial court where there is sufficient
evidence in the record to support the trial court's finding that
the breach was material. It is not the number of blueprints per
se which is important, but the financial significance of the
blueprints to which QCC II never received good title. There is
evidence in the record to indicate that the 53 blueprints were
very significant financially, even if this evidence was rejected
by the jury. See Mayfair Construction Co. v. Waveland Associates
Phase I Limited Partnership, 249 Ill. App. 3d 188, 202, 619 N.E.2d
144, 154 (1993) (party's refusal to submit construction contract
disputes to architect for arbitration as per the contract was a
material breach where there was an immediate financial impact on
the other party).

C. DOES KEL-KEEF'S BREACH OF THE PURCHASE AGREEMENT ALSO
CONSTITUTE A BREACH OF THE NON-COMPETITION AGREEMENT BECAUSE THE
TWO AGREEMENTS WERE PART OF ONE CONTRACT FOR THE SALE OF A
BUSINESS?

QCC II next argues that the purchase agreement and the non-competition agreement were part of a single transaction for the
purchase and sale of a business, and that Kel-Keef's breach of
contract thus justified QCC II's non-performance of both the
purchase agreement and the non-competition agreement. In support,
QCC II contends that the trial court ruled without authority that
the non-competition agreement was a separate agreement and that a
breach of the purchase agreement does not also constitute a breach
of the non-competition agreement. We disagree.

"The general rule is that in the absence of evidence of a
contrary intention, where two or more instruments are executed by
the same contracting parties in the course of the same
transaction, the instruments will be considered together ***
because they are, in the eyes of the law, one contract."
(Emphasis added.) Tepfer v. Deerfield Savings & Loan Ass'n, 118
Ill. App. 3d 77, 80, 454 N.E.2d 676, 679 (1983). Furthermore, it
has been held generally that a material breach of an agreement
discharges the non-breaching party from a covenant not to compete.
Galesburg Clinic Ass'n v. West, 302 Ill. App. 3d 1016, 1018, 706
N.E.2d 1035, 1036-37 (1999). However these two foregoing
generalities are not dispositive in this instance. We first note
that the parties to the two instruments are not the same, which
challenges the notion that these two contracts are one. Both Kel-Keef and Fleck are parties to the purchase agreement, but only
Fleck is a party to the non-competition agreement and Fleck is not
a party to the promissory note. Moreover, even if we are to
construe the promissory note and the non-competition agreement as
one contract, that would still raise questions of severability.
Whether a contract is entire or severable is a question of fact.
See Carvel Co. v. Spencer Press, Inc., 708 A.2d 1033, 1035 (Me.
1998); Mortenson Co. v. Timberline Software Corp., 970 P.2d 803,
807 (Wash. App. 1999); see generally, 17B C.J.S. Contracts § 791.
Therefore we review the trial court's determination that the
contracts are severable under the manifest weight of the evidence
standard.

The "rule that rescission of a contract must be in toto does
not apply to a contract of which the parts are so severable as to
form independent contracts." Kaplan v. Keith, 60 Ill. App. 3d
804, 808, 377 N.E.2d 279, 281 (1978). "The question whether a
contract is entire or severable cannot be determined by any
precise rule." Keeler v. Clifford, 165 Ill. 544, 547, 46 N.E.
248, 249 (1897). Whether a contract is severable depends on the
intention of the parties. Kaplan, 60 Ill. App 3d at 808, 377
N.E.2d at 279. In determining the intention of the parties,
useful factors include whether performance by one party consists
of distinct and separate items and whether the price is
apportioned for each item of performance. Kaplan, 60 Ill. App 3d
at 808, 377 N.E.2d at 279 (finding a release to be severable from
a real estate sale contract where $500 was directly apportioned
for the execution of the release).

In this case, the non-competition agreement and the purchase
agreement would be severable even if they were in the same
instrument and rescission of one does not necessitate rescission
of the other. The two agreements provide for two distinct and
separate performances by the vendors. The purchase agreement
provides for the transfer of the assets of the replacement parts
business from Kel-Keef to QCC II, while the non-competition
agreement provides that Fleck is not to compete with QCC II for
five years. Furthermore, separate consideration was given by QCC
II for the purchase agreement and the non-competition agreement.
We therefore find the trial court's determination that the
agreements are severable is not against the manifest weight of the
evidence, even though we might not uphold this finding under de
novo review. Since the agreements are severable, rescission of
the purchase agreement does not necessitate rescission of the non-competition agreement.

E. IS QCC II ENTITLED TO RECISSION AS A REMEDY

Finally, Kel-Keef argues that QCC II is not entitled to
recission of the contract, or any similar remedy. In support Kel-Keef argues that QCC II never took steps to revoke the contract
and that QCC II's dilatory conduct had ensured that the parties
cannot be returned to the status quo. We disagree with Kel-Keef's
contention. It is true that QCC II never expressly prayed for a
remedy of recission; however, QCC II defended against Kel-Keef's
claim by denying Kel-Keef's performance under the contract, which
Kel-Keef was required to prove in order to recover on the
contract. It was on that basis that the trial court excused QCC
II from performing the purchase agreement. See Israel v. National
Canada Corp., 276 Ill. App. 3d 454 , 461, 658 N.E.2d 1184, 1191
(1995)("the party seeking to enforce the contract has the burden
of proving that he has substantially complied with all material
terms of the contract"); R. Krevolin & Co. v. Brown, 89 A.2d 255,
258 (N.J. Super. Ct. App. Div. 1952) ("Full or substantial
performance of the promise of one party is a condition precedent
to the right to maintain an action on the promise of the other
unless the promise of the latter is independent of any performance
by the former"). See also Brewer v. Custom Builders Corp., 42
Ill. App. 3d 668, 673, 356 N.E.2d 565, 570 (1976)("a contractor
whose work amounts to less than substantial performance has no
right to the contract price; he is said to have no remedy on the
contract"); accord, 3A Corbin on Contracts, sec. 710. The trial
court found that Kel-Keef materially breached the contract, so it
can hardly be said that Kel-Keef substantially performed.

Kel-Keef further maintains that because QCC II's dilatory
conduct in failing to inform Kel-Keef of its breach of the
warranty of title ensured that the parties cannot be returned to
the status quo, recission is improper. We disagree. As noted
above, QCC II is not excused from its performance of the contract
here under a doctrine of recission per se, but because Kel-Keef
failed to show that it had substantially performed under the
contract. Kel-Keef has not presented any authority suggesting
that QCC II's dilatory conduct should excuse Kel-Keef from the
requirement that it prove substantial performance, a condition
precedent in order for Kel-Keef to recover under the contract.
Kel-Keef's authority is inapposite, as in each case recission was
raised offensively by the promisee (see Puskar v. Hughes, 179 Ill.
App. 3d 522 (1989); Luciani v. Bestor, 106 Ill. App. 3d 878
(1982)), unlike this case where the non-performance of the
contract is raised defensively and premised upon the vendor's
failure to prove that he performed.

Moreover, implicit in the court's finding that QCC II is
excused from performance under the purchase agreement is a
determination that QCC II's conduct was timely. Whether QCC II's
conduct was dilatory is a question of fact. Wainwright v. Elgin
Windmill Co., 9 Ill. App. 2d 574, 134 N.E.2d 44 (1956) (reasonable
time to give notice for breach of warranty a question of fact).
"Where delay in notification does not result in prejudice to the
defendant, it is not generally viewed as unreasonable." Maldonado
v. Creative Woodworking Concepts, Inc., 296 Ill. App. 3d 935, 940,
694 N.E.2d 1021, 1026 (1998). In this case the evidence does not
compel a finding of dilatory conduct. The materials in question
consist of items such as blueprints which are not likely to
deteriorate. Furthermore, while QCC II purchased the sold assets
in 1989 it was not until 1993 that QCC II fully discovered that
they lacked title to 53 of the blueprints as the consent decree in
which Fleck admitted to misappropriation was signed on December
14, 1993. QCC II's attorney sent Kel-Keef a letter dated June 3,
1994, informing him of the alleged breach of the contract, and QCC
II thus notified Kel-Keef of its breach less than one year after
QCC II discovered that Fleck had indeed misappropriated blueprints
from Rockwell. We cannot say that a delay of less than a year
between QCC II's full discovery of the breach and its notification
of Kel-Keef was unreasonable per se and we therefore defer to the
implicit findings of the trial court which are not contrary to the
manifest weight of the evidence.

F. THE FRAUD CLAIM

QCC II argues that the trial court abused its discretion by
excluding evidence of a lawsuit which existed at the time of the
contract, but which was not disclosed to QCC II by Kel-Keef. Kel-Keef argues that QCC II has waived this issue on appeal because
QCC II failed to raise it in a post-trial motion. Kel-Keef
further argues that even if this issue was not waived by QCC II
the evidence was properly excluded because it was highly
prejudicial. We agree with Kel-Keef.

In order to preserve an issue for review a party must make
both an objection at trial and a written post-trial motion raising
the issue. People v. Enoch, 122 Ill. 2d 176, 186, 522 N.E.2d
1124, 1129 (1988). In this case, QCC II has not pointed this
court to any post-trial motion raising this issue, and our review
of the record has not revealed any such motion. QCC II has waived
this issue on appeal. Likewise, we need not address the arguments
relating to damages in the suit at law, as QCC II has abandoned
its claim for damages.

II. KEL-KEEF'S Cross-appeal

A. BREACH AND DAMAGES

Kel-Keef first argues on cross-appeal that it did not breach
the contract and that the trial court erred in not granting its
motion for directed verdict on that issue in the suit at law. We
have already addressed the issue of Kel-Keef's alleged breach of
contract in the context of the chancery case and concluded that
Kel-Keef did indeed breach the contract. Therefore, we need not
revisit this issue here. We also decline to address Kel-Keef's
claim that QCC II presented insufficient evidence as to damages,
as QCC II has abandoned that remedy, and therefore this point is
moot.

B. ATTORNEY FEES

Kel-Keef next argues that QCC II is not entitled to the
attorney fees it was awarded in the case at law. The purchase
agreement provides that attorney fees may be awarded to the
prevailing party in any litigation brought for its breach. "A
party can be considered a 'prevailing party' for the purposes of
awarding fees when he is successful on any significant issue in
the action and achieves some benefit in bringing suit [citation]
receives a judgement in his favor [citation] or by obtaining an
affirmative recovery." Grossinger Motorcorp, Inc. v. American
National Bank and Trust Co., 240 Ill. App. 3d 737, 753, 607 N.E.2d
1337, 1348 (1992). "To qualify as a prevailing party, a plaintiff
must succeed in obtaining some relief from the defendant against
whom attorney fees are sought." Community Consolidated School
District No. 54 v. Illinois State Board of Education, 216 Ill.
App. 3d 90, 93, 576 N.E.2d 250, 253 (1991). Since we hold that
QCC II has abandoned its remedy in its action at law and QCC II
has therefore not obtained any relief against Kel-Keef as a result
of the action at law, QCC II can no longer be said to have
prevailed in that action. Even if QCC II has prevailed on the
issue of breach of contract in the action at law, QCC II has
received no benefit, judgement or affirmative recovery from
bringing the suit at law. The award of attorney fees to QCC II is
thus vacated. Whether a similar award of fees (or any award at
all) would be appropriate in the chancery action is a matter which
should be determined in the context of the chancery action itself.
See Berlak v. Villa Scalabrini Home for the Aged, Inc., 284 Ill.
App. 231, 671 N.E.2d 768 (1996). We thus remand to the trial
court for a determination of that issue.

III. CONCLUSION(4)

With regard to QCC II's appeal, in the chancery action the
judgement of the chancery court on count I (breach of the
promissory note) and on count II (personal guarantee of the
promissory note) against QCC II, Guckien and Stoneham jointly and
severally is reversed and remanded to the trial court with
directions that judgement be entered in favor of QCC II on count I
and in favor of Guckien and Stoneham on count II and that the
trial court determine whether and to what extent QCC II is
entitled to attorney fees.

The judgement of the chancery court on count IV (breach of
the non-competition agreement) and count V (personal guarantee of
the non-competition agreement) in favor of Fleck and against QCC
II, Guckien and Stoneham, jointly and severally is affirmed.

With regard to the suit at law the judgement of the trial
court on count I (fraud) in favor of Fleck and Kel-Keef and
against QCC II is affirmed. The judgement on count II (breach of
contract) in favor of QCC II and against Kel-Keef for $60,000 is
vacated pursuant to the election by QCC II to forgo the award of
damages in the action at law, as is the award of attorney fees.

With regard to Kel-Keef and Fleck's cross-appeal from the
action at law, we have already vacated the judgement of the trial
court on count II in favor of QCC II and against Kel-Keef on the
grounds that QCC II has elected to accept the chancery remedy. We
have also vacated the award of attorney fees in that action.
Accordingly the issues raised by the cross-appellants as to the
action at law are moot.

Affirmed in part; reversed in part; cause remanded to the
chancery court below.

COUSINS, P.J., and McNULTY, J., concur.

1. 1The court did not distinguish between Fleck and Kel-Keef in
its initial opinion.

2. 2Because the briefs filed by the parties treat QCC II,
Stoneham and Guckien as one, QCC II will refer to all three
parties in the analysis section, except where otherwise noted, or
the parties are referred to individually.

3. 3The trial court granted a directed verdict with regard to
count III of QCC II's complaint at law which claimed breach of
warranty, because the warranty had expired.

4. 4In the conclusion, references to QCC II refer only to the
corporate entity and not to Guckien and Stoneham who are referred
to separately by name.